The Dogs of the Dow Jones strategy gained a major
popularity within the recent years. The strategy is very simple: You only need to
invest money into the 10 cheapest stocks of the Dow Jones, measured by expected
growth and price to earnings ratios.
This investment
rule can also be used for other indices or adjusted by several criteria.
Toady
I've used the formula in order to find the cheapest stocks from the Dividend
Aristocrats index. The index has 54 constituents with more than 25 years of
consecutive dividend growth.
I selected only those
stocks with a forward P/E of less than 15 as well as future earnings growth of
5 percent for the next five years. Only eleven stocks fulfilled these criteria. The top five results by dividend yield ratio are listed below.
In general, I'm a
real fan of long-term dividend growth stocks but due to the low interest policy of
the Federal Reserve, stock prices also skyrocket and valuations are really
high. It's not good to buy highly valuated stocks.